Family move into home

The Mortgage Guarantee Scheme ‘officially’ launched this week to help those who want to buy a home with a 5% deposit. It was announced by the government to encourage lenders to re-introduce 95% Loan to Value (LTV) mortgages, as most were withdrawn at the beginning of the pandemic.

Under the terms of the scheme, the government will guarantee a portion of the mortgage over 80%. With a 95% LTV mortgage, this means that the government will effectively cover 15% of the value of the loan should a homeowner default.

The scheme is similar to the Help to Buy mortgage guarantee scheme, which ran for three years from 2013.

Who is eligible ?

Both first-time buyers and home movers are eligible for the mortgage guarantee scheme. The mortgage must be used for buying a residential property, which you will live in as your primary residence. You cannot buy second homes or buy-to-let properties using the scheme.

Existing properties and new-build homes up to £600,000 in value are eligible.

You can only apply for a repayment mortgage as interest-only loans are exempt. As with any mortgage, you will have to pass standard checks. These will include credit score assessments and affordability checks.

To be eligible, the mortgage you are applying for needs to be between 91% and 95% of the value of the property you want to buy.

Although the deadline for the scheme is 31 December 2022, the government is reviewing it before then.

What mortgage rates are available?

As ever, the mortgage rates offered depend on the lender and the timescale of the fixed-rate. There is also individual lender criteria to take into consideration. This is why when buying a property, we advise using a mortgage broker.

Mortgage brokers can access deals that lenders do not necessarily offer individuals. Brokers are also best placed to understand the intricacies of deals and the house buying process.

At Co-Navigate, we are more than happy to help discuss options in more detail. So, if you would like more information about the scheme and/or your eligibility, then please do not hesitate to contact us today.

First-time buyers with 95% LTV mortgage

The first lender to offer 95% loan-to-value mortgages since the start of the pandemic is launching a new deal.

Accord Mortgages has announced its new product will be exclusively available to first-time buyers and that they are not using the government’s mortgage guarantee scheme for this deal, which was announced in the Budget earlier this month.

And the good news is, as an independent mortgage broker, Co-Navigate can offer this deal to qualifying first-time buyers.

Along with the government’s scheme, introducing the 95% LTV mortgages helps first-time buyers get a foot on the property ladder.

What is a 95% LTV mortgage?

A mortgage described as 95% LTV means that the loan is 95% of a property’s price, or value. For example, if you were buying a house worth £200,000 with such a mortgage, you would put down £10,000 of your own money as a deposit and borrow the remaining £190,000.

When the first lockdown of the pandemic was announced almost a year ago, lenders withdrew 95% LTV mortgages. Prior to lockdown there were more than 390 of these mortgage deals available, according to data from Moneyfacts.

If you are a first-time buyer looking for a mortgage, then contact us for a consultation. Although based in Newcastle, we can meet you online no matter where you are, so get in touch today.

Stamp Duty Holiday concept

The current Stamp Duty Holiday comes to an end in a little over two months. And there is a growing call from across the property industry for the Chancellor to extend it.

Removing the property tax from homes under £500,000 has been a shot in the arm for the market. While Covid-19 brought a sudden halt last March, the market was already slowing down ahead of it.

For many people, staying put before the holiday was the only option as the tax over-stretched their finances. Whilst they could afford the mortgage on their new home, and even covering the cost moving, finding the extra cash for Stamp Duty was a stretch too far.

Prior to the holiday, anyone buying a new home over £125,000 had to find funds to pay the treasury to cover the price of moving. The percentage increases at the next threshold of £250,000). Of course, there was a higher threshold for first-time buyers, but it still often put off next-time movers.

The average house price in the UK is £256,000 and these are not exactly vast mansions, but everyday homes for average-sized families. So, the Stamp Duty Holiday gave many of those who were outgrowing their home the chance to move. It is no surprise, therefore, that the market picked up the way it did at the end of 2020.

But with the deadline looming and delays due to Covid-19 and further lockdowns, it means many could miss out! Even if someone has had their mortgage approved and started the buying process in the past few weeks, there is a chance the deal will not meet the deadline.

Throw in the fact that anyone in the chain (including solicitors, surveyors, etc.) may have to self-isolate, it could lead to unexpected delays. As a result, a buyer will have to find extra cash to pay the tax through no fault of their own.

Stamp Duty ‘chaos’?

As TV property expert Phil Spencer said last week, the finite deadline could release ‘chaos’ and ‘mayhem’. With everyone working to the date, he believes it will create major issues if sales are not completed in time.

He said in a radio interview, “It’s great to keep people motivated towards that day. But actually, if they haven’t completed their deals on that date, the chances are that deals will be collapsing left right and centre. It will just be bedlam.”

The last thing anyone wants is to see deals collapse because the knock-on effect in the chain will be devastating. From the first-time buyers at the bottom of the chain to those downsizing at the top.

Sold STC

To help reduce the risk of the market being thrown into chaos, extending the Stamp Duty Holiday for those who have started the buying process would help.

Research by property magazine Property Reporter says there is an ‘overwhelming demand’ and mounting pressure on the government to do this. We would certainly agree!

So many buyers will spend money on legal advice, searches, surveys and arrangement fees over the next couple of months only to find they can’t complete in time. A house currently Sold Subject to Contact (STC) could then end up back on the market on 1 April! That will be emotionally devastating for both buyer and vendor; but the buyer will also end up with less money to spend in future as they have already paid fees.

Buyers are already beginning to retreat, and house builder Persimmon is reporting a slowdown in sales as the deadline gets nearer.

Extension call

A petition calling on the Government to extend the holiday has surpassed the 100,000 signatures. This means the issue will be considered for debate in Parliament.

We would add our support to the debate because we believe an extension is necessary to keep the market moving. Certainly, allowing those who have had offers accepted should qualify for the tax break at the very least.

Like Phil Spencer, we agree that a clear deadline and strict cut-off date is not the answer.

We recognise that this tax adds coffers to the public purse, but it is unfair on all those who are so close to completing having to rethink due to circumstances outside their control.

If you want to talk about your mortgage, contact the mortgage team today.

This year has been like no other and the mortgage market, as expected, has been impacted by the Covid pandemic.

Although house prices climbed to record highs during 2020, the volume of mortgage transactions fell. Lenders also became more risk averse and fewer borrowers withdrew equity from their homes.

So, what are the main changes for the mortgage market?

Fewer mortgages

There was an unprecedented decline in the range of mortgage products available during the lengthy first UK lockdown. Such low numbers have not been seen since the financial crisis of 2007.

In February 2020, deals with a loan to value above 90% represented 10% of the UK’s residential mortgage market. By June, these had fallen to fewer than two per cent. Buyers became sceptical, nervous and unsure about their futures. Unemployment has become a real threat for lots of people and this had an impact on the mortgage market.

Fewer borrowers

The number of mortgages agreed fell significantly during the lockdown crisis; but it is now edging slowly back up. In January this year, the number of people securing a mortgage was 16% higher than in January 2019. But by April, figures were 54% down on the previous month a year earlier. It was picking back up again in June, but still below the trend of previous years.

It is thought that the rebound was due to the increase in demand at the end of lockdown, as the market almost completely froze in the early stages. The lockdown has meant many out-of-town homes with more outside space have become very popular as people worry about future lockdowns. City dwellers appear to be heading out into suburbs and smaller towns and villages.

Remortgaging

The remortgage market wasn’t hit quite as hard as the rest of the mortgage market. The pace of remortgaging certainly took a hit, but figures remain fairly consistent with the patterns of the last five years.

Those remortgaging are typically established homeowners with lots of equity in their properties. This suggests that the market was much kinder to the older generation, but the younger first-time buyers still had a mountain to climb.

What’s next?

There are signs that the market is bouncing back and starting to recover. The second lockdown restrictions are easing a little, and people are regaining some confidence to mix with others. There’s also more economic stability, although many industries and sectors are still at risk of mass job losses. This will become more apparent once the furlough scheme finally ends next year.

Mortgage products have reduced, and costs have continued to rise, so first-time buyers and those with limited savings have fewer options than they did prior to lockdown.

While house prices continue to rise, it remains to be seen what the next six months look like for the mortgage market. Many are expecting to see a boom as restrictions continue to ease, especially in light of news about three potential vaccines becoming available.

Either way, the mortgage market is a fluid landscape at the moment. The mortgage and housing market is always subject to change, but we always scrutinise what is happening so we can give the best advice.

If you need help with your mortgage or remortgage, please do not hesitate to contact us.

Saltwell 10 Road Race Runners Co-Navigate Newcastle Financial Advisers

Supporting local events is something we love to do at Co-Navigate. It’s all part of our mission to give! Whether it’s giving something back to our community or giving advice to clients so they realise their goals and dreams.

There is no doubt that this year has been very strange for us all. Events and plans have had to be put on hold across the UK. But looking forward is also part of our ethos! With that in mind, we are delighted to announce that we are sponsoring two local causes within our community.

First of all, we are sponsoring the Whickham Fellside Youth Football Club’s Under 10 Girls team. This is their inaugural year in the Russell Foster League, and we wish them the very best of luck. We all love footy at Co-Navigate and are keen to promote the growing interest in the girls’ game.

As well as football, some members of the team love running. In fact, our Director and Mortgage & Protection Adviser, Lyndsey, runs with and is a coach at Saltwell Harriers.

So we are delighted to announce that we are sponsoring next year’s Saltwell 10K Road Race.

As England’s oldest road race, the three-lap race around Saltwell Park is a traffic-free route that ends at the Lake. This year’s race has been cancelled, sadly, but we are excited to be involved again next year.

We will keep you up to date about when the 2021 Saltwell 10K Road Race is taking place. Until then, please visit the website saltwellharriers.org.uk for the latest news.

Lyndsey Stephenson Mortgage Adviser Co-Navigate Newcastle

In our last blog, we met Andy Mathers. Now, we introduce our Mortgage & Protection Adviser, Lyndsey, and discover how helping her Dad as a teenager helped her put her foot on the career ladder of financial services…

Name

Lyndsey Stephenson

What is your position at Co-Navigate?

Mortgage & Protection Adviser and Director

Why did you choose a career in financial services?

My Dad was a Financial Adviser and I grew up knowing finance as a natural part of life. I started at a young age helping out my dad in his business with basic office tasks, etc.  I then went on to help a few other financial advisers in their businesses. By going into a shared office from my teenage years and doing admin tasks for pocket money, such as filing and shredding, I got to know about what goes on behind the scenes in finance. When I went to college, I started working for another adviser as his main administrator part-time. I got used to chasing mortgages and speaking to advisers and everything that goes on, basically everything except advising. Leaving University, it seemed an obvious choice to go into financial services as I already had the background and experience.  

What is your experience?

I became an adviser in 2004 and ultimately, I’d say 5 or 6 years prior to that I was working in the field doing admin work.

What do you enjoy about your job?

The best thing for me is I get to be part of a really important part of people’s lives – their home.  I get to help people move into their dream home and that’s a really powerful thing to be part of. The fun bit is helping people get to where they want to be.  And I get to meet such lovely people every day. 

What key advice would you offer to a potential client to Co-Navigate?

Look at everything with an open mind. A lot of people have a pre-conceived idea about what a financial adviser is or should be. At Co-Navigate, we’re very different to other financial advisers; we want to build relationships with people and help them get to where they want to be rather than being transaction focused.

Favourite colour

Navy blue.

Favourite music

I’m a big fan of 80s music and could listen to it all day long. And I also like 90s pop and rock when I am running. I’m a big fan of easy listening at the weekend.

Hobbies and interests

I am a big fan of keeping fit. My husband is a qualified fitness instructor, so exercise is a big thing for us as a family. I do a lot of running, circuit training and cycling. I love spending time with family and friends, and I have really missed it during lockdown.

Andy Mathers Co-Navigate Director and Financial Planner

As part of a new series, we are introducing the people behind Co-Navigate. You may have already met the Co-Navigate family on our ‘Meet the Team’ page. But what makes them tick? And how did they move into a career in financial planning?

First of all, we meet Andy Mathers…

Name

Andy Mathers

What is your position at Co-Navigate?

Financial Planner, Co-owner and Director

Why did you choose a career in financial services?

I pretty much fell into the career. I did my degree in economics and worked for two years at a church. During that time, I was buying my first house and when I spoke to someone at the youth group he asked if I wanted to speak to his dad, who was a mortgage adviser. I went to see him and six hours later he offered me a job! I shadowed him for two weeks and as I have a geeky mathematical brain and it’s a people-related job with maths thrown in, I absolutely loved it. That was 22 years ago!

What is your experience?

Initially, I was a general adviser, working with mortgages, investments and pensions. In the past 10 years I have focused on investment and pensions. Pretty much all my clients are medical professionals, that is my speciality now.

What do you enjoy about your job?

The key bit is helping people make the most of their finances and make good decisions. People worry about talking about money and the future. What we hopefully do is give them a sense that they are in control of their finances and make wise, educated decisions, such as, ‘Can I afford to retire a year earlier?’ It gives people the sense of freedom as some people feel guilty about spending money. But when it’s planned and you can afford it, it frees you to enjoy your money guilt-free. It’s not just financial, it’s life planning to help people make good choices.

What key advice would you offer to a potential client to Co-Navigate?

Don’t bury your head in the sand! A problem shared helps deal with it in a very positive way and you don’t feel worried about it. Talk to us about your financial planning. We help people understand what their finances look like and help look forward in a positive way. Our clients have real certainty for the future, which helps people make good decisions rather than fear or worry about it.

Favourite colour

Blue.

Favourite music

I don’t really get chance to listen to music as we have 3 daughters. When we get in the car I don’t get chance to choose as it’s usually Tik Tok at the moment. My life has been ruined by Tik Tok! I do love jazz to relax to.

Hobbies and interests

Faith is really important to me – I’m actively involved in our local church. And I love hockey. When we’re not in lockdown I am playing hockey 6 hours a week. That’s 4 hours of practice and 2 hours of playing.

First-time buyer couple in their new home

If you are a first-time buyer, you may hear all kinds of ‘facts’ about buying your first home and obtaining a mortgage. But many of these facts are simply not true!

Getting your foot on to the property ladder is difficult enough without having to work out the financial and legal aspects for yourself. So, to help first-time buyers sort fact from fiction, we have chosen to discuss 5 of the biggest myths around mortgages and house buying.

First-time buyer myths

Myth 1: You need a big deposit

It is true to say that if you have a larger deposit you may have a wider choice of mortgages at potentially more favourable rates. It doesn’t mean you always need a big deposit, however. The coronavirus slowdown has led to some providers withdrawing mortgages that require a 5 or 10% deposit; these are known as 95% and 90% loan to value (LTV) mortgages.

Others, however, have retained their 90% LTV mortgages. This is where using an independent mortgage broker, such as Co-Navigate, is ideal because we access mortgages that individual house buyers and banks often can’t. If you have a lower deposit and can’t find a mortgage, speak to one of our experienced team members.

Myth 2: I must use the estate agent’s mortgage adviser

Estate agents and house builders often refer you to a mortgage adviser within their office. Some will tell you that it is compulsory to use their in-house adviser – that is simply not true!

You are free to use any mortgage adviser, bank or building society of your choosing. If you find your ideal house, tell the estate agent or house builder you are using your own adviser. 

The same goes for conveyancers or solicitors. You can use your own and do not have to instruct those used by the estate agent or house builder.

Myth 3: I can only get a mortgage through my bank

Banks and building societies provide mortgages – but they are not alone. Other financial institutions offer mortgages, although you often need an independent adviser to access the specialist providers.

Banks can only use their own mortgage products, whereas an independent adviser has access to many more. Even comparison websites cannot access all the products on the market. And independent brokers like us can often access better rates on mortgages than those tied to one provider.

Make sure you talk to an independent mortgage broker before you go house-hunting!

Myth 4: I do not need a mortgage until I find my dream home

If you wait until you find your dream home before considering your mortgage, it can end up as a nightmare. Unless you have checked what you can afford, your ideal house could be beyond your budget. 

Once you start considering buying your first home, it is advisable to speak to a mortgage broker or provider to find out how much you will be allowed to borrow and more importantly what is within your monthly budget.

Following the application process, if appropriate, we will ensure you receive an ‘agreement in principle’ (AIP). You often need to prove to the estate agent or house builder that you are in a position to buy and the AIP does just that. Please note that the AIP isn’t a mortgage offer. We can explain more about the AIP at a discovery meeting.

Myth 5: You only need a deposit and mortgage to buy a home

There’s more to buying a house than arranging a mortgage and having enough for a deposit. You need to remember that there are many costs included in buying a house.

Fees and expenses include, but are not limited to:

  • Survey costs
  • Mortgage arrangement and valuation costs
  • Solicitors fees
  • Removal costs
  • Buildings insurance
  • Stamp duty (your individual circumstances dictate what this may be)

If you are looking for your first home, remember that you must budget for these additional fees. This is something that we like to help you prepare at our first meeting, so you know what you can truly afford.

When you are ready to start searching your first home, contact us so we can help you find the best mortgage deal for you and be there to make the process as easy and as stress free as possible.

Couple remortgaging for captial to build house extension

Remortgaging is not only something to consider when your current mortgage term is coming to an end (to prevent reverting to Standard Variable Rate), it can also be a very useful way to raise capital.

Using equity tied up in your home can pay for improvements to your house – whether that is an extension, a loft conversion or for adding a home office. The coronavirus lockdown has meant millions of people experienced WFH (working from home), and many have discovered their homes fail to offer adequate space.

According to ONS figures, 20 million people relocated to their home to work during the pandemic. That is almost 10 times the number that normally do. A survey also reports that 45% of people believe they will work from home more often when the lockdown ends.

Building an extension for a purpose-built home office could be high on your list of priorities as a result. Maybe you feel an extra room for your little ones is going to be necessary after being in the same space with your family for 12 weeks or more.

So, releasing equity by remortgaging could give you the cash you need to fund those plans. And it is likely to be cheaper than searching for a new house!

What is equity?

When you take out a mortgage on your home, the company providing it owns a large percentage of your property. For example, first-time buyers who take out a mortgage with 90% loan-to-value (LTV) effectively own 10% ‘equity’ in the property.

Over time you increase the amount of the property you own as you pay your mortgage. In our example, the buyers’ LTV may be around 88% a year later, so their equity rises and becomes 12%.

This is not the only way to increase the value of your equity, it rises if the property’s value goes up. This means any equity you have can be released to pay for home improvements, but terms and conditions and lending limits apply.

How remortgaging for capital works

If your property was worth £250,000 and you took out a repayment mortgage of £200,000 five years ago, the amount you owe will have fallen. Let’s say for example it is now at £180,000. If the property’s value has also increased to £300,000, it means the equity you own has increased from £50,000 when purchased to £120,000 today.

If you were simply remortgaging at the end of your current deal, your mortgage would be for £180,000. The loan-to-value would now be 60%, a significant fall from the 80% LTV you originally borrowed.

But you could, assuming you have the income to support it, remortgage for a larger amount and release some equity to spend on your home office or house extension. In our example, we may remortgage for £200,000, releasing £20,000 to spend.

Beware early repayment charges

If you remortgage during the initial fixed or tracker period of your mortgage you are likely to incur an early repayment charge. This would then reduce the amount of equity you can release. If your initial mortgage period has ended and you have moved over to the lender’s standard variable rate, you are unlikely to face an early repayment charge.

The best thing to do before changing is to contact our mortgage experts. Our independent mortgage advisers have access to more mortgage deals than the high street or via comparison sites. We have helped many people in the North East and beyond release equity for home improvements and other reasons when it is right for them.

If you are interested in finding out more, you can contact our mortgage team by emailing enquiries@co-navigate.co.uk

Your home may be repossessed if you do not keep up the repayments on your mortgage

Why we are planning to launch a project about teaching children about the value of money

Would you consider teaching your children the value of money? If you answered ‘yes’ it seems that you are not alone.

Getting to grips with maths is important, but many people say they would have preferred to have learned about handling money at school than the intricacies algebra. At Co-Navigate we’re passionate about showing people how planning their finances can help them reach their life goals.

But just imagine if that happened to you when you were younger. Setting up your first home would probably have been a easier if you had learned about budgeting at school. 

The earlier you look at your life goals and start planning, the easier it is to achieve them because of the extra time you have. So teaching children and teenagers about the value of money would be useful, we think.

Money Masterclass poll

It is why we decided to ask our social media followers what they thought of the idea of Co-Navigate designing Money Masterclasses for young people. And the resounding answer was that they thought it was an excellent idea. A poll showed that 90% of our followers would be interested in Money Masterclasses! 

The inspiration behind it followed a video chat we had a couple of weeks ago about an article that one of the team had seen in the FT. It was a personal feature about how lockdown had given a parent the perfect opportunity to teach their children about money.

It may not sound very exciting but if you make it interesting then it can be quite exciting.

Children and the value of money

The writer talked about the importance of pocket money and household budgeting. It included showing children modern ways of paying pocket money, such as via the contactless card for children, GoHenry. Board games such as Monopoly also featured as a great way to teach children about valuing money.

Of course, savings were also discussed, such as Junior ISAs, to illustrate to children the importance of saving.

As the feedback from our poll was incredibly positive, we’re now working on plans for Co-Navigate Money Masterclasses. Please bear with us! As well as running the business, a number of us are also juggling homeschooling. But we do plan to look at the idea over the next few weeks.

If you would like us to keep in touch with you about Money Masterclasses, then please sign up to our mailing list. We don’t sell or pass on your details, nor do we bombard you with emails! We’ll just let you know when Money Masterclasses are rolled out.